FDIC Law, Regulations, Related Acts

8000 - Miscellaneous Statutes and Regulations

Distribution, Redemption, and Repurchase of Redeemable
Securities

Sec. 22. (a) A securities association registered under
section 15A of the Securities
Exchange Act of 1934 may prescribe, by rules adopted and in effect in
accordance with said section and subject to all provisions of said
section applicable to the rules of such an association--

(1) a method or methods for computing the minimum price at which
a member thereof may purchase from any investment company any
redeemable security issued by such company and the maximum price at
which a member may sell to such company any redeemable security issued
by it or which he may receive for such security upon redemption, so
that the price in each case will bear such relation to the current net
asset value of such security computed as of such time as the rules may
prescribe; and

(2) a minimum period of time which must elapse after the sale or
issue of such security before any resale to such company by a member or
its redemption upon surrender by a member in each case for the purpose
of eliminating or reducing so far as reasonably practicable any
dilution of the value of other outstanding securities of such company
or any other result of such purchase, redemption, or sale which is
unfair to holders of such other outstanding securities; and said rules
may prohibit the members of the association from purchasing, selling,
or surrendering for redemption any such redeemable securities in
contravention of said rules.

(b)(1) Such a securities association may also, by rules adopted and
in effect in accordance with said section 15A, and notwithstanding the
provisions of subsection (b)(6) thereof but subject to all other
provisions of said section applicable to the rules of such an
association, prohibit its members from purchasing, in connection with a
primary distribution of redeemable securities of which any registered
investment company is the issuer, any such security from the issuer or
from any principal underwriter except at a price equal to the price at
which such security is then offered to the public less a commission,
discount, or spread which is computed in conformity with a method or
methods, and within such limitations as to the relation thereof to said
public offering price, as such rules may prescribe in order that the
price at which such security is offered or sold to the public shall not
include an excessive sales load but shall allow for reasonable
compensation for sales personnel, broker-dealers, and underwriters, and
for reasonable sales loads to investors. The Commission shall on
application or otherwise, if it appears that smaller companies are
subject to relatively higher operating costs, make due allowance
therefor by granting any such company or class of companies appropriate
qualified exemptions from the provisions of this section.

(2) At any time after the expiration of eighteen months from the
date of enactment of the Investment Company Amendments Act of 1970, the
Commission may alter or supplement the rules of any securities
association as may be necessary to effectuate the purposes of this
subsection in the manner provided by
section 19(c) of the Securities
Exchange Act of 1934.

(3) If any provision of this subsection is in conflict with any
provision of any law of the United States in effect on the date this
subsection takes effect, the provisions of this subsection shall
prevail.

(c) The Commission may make rules and regulations applicable to
registered investment companies and to principal underwriters of, and
dealers in, the redeemable securities of any registered investment
company, whether or not members of any securities association, to the
same extent, covering the same subject matter, and for the
accomplishment of the same ends as are prescribed in subsection (a) of
this section in respect of the rules which may be made by a registered
securities association governing its members. Any rules and regulations
so made by the Commission, to the extent that they may be inconsistent
with the rules of any such association, shall so long as they remain in
force supersede the rules of the association and be binding upon its
members as well as all other underwriters and dealers to whom they may
be applicable.

(d) No registered investment company shall sell any redeemable
security issued by it to any person except either to or through a
principal underwriter for distribution or at a current public offering
price described in the prospectus, and, if such class of security is
being currently offered to the public by or through an underwriter, no
principal underwriter of such security and no dealer shall sell any
such security to any person except a dealer, a principal underwriter,
or the issuer, except at a current public offering price described in
the prospectus. Nothing in this subsection shall prevent a sale made
(i) pursuant to an offer of exchange permitted by
section 11 including any offer
made pursuant to section 11(b); (ii) pursuant to an offer made solely
to all registered holders of the securities, or of a particular class
or series of securities issued by the company proportionate to their
holdings or proportionate to any cash distribution made to them by the
company (subject to appropriate qualifications designed solely to avoid
issuance of fractional securities); or (iii) in accordance with rules
and regulations of the Commission made pursuant to subsection (b) of
section 12.

(e) No registered investment company shall suspend the right of
redemption, or postpone the date of payment or satisfaction upon
redemption of any redeemable security in accordance with its terms for
more than seven days after the tender of such security to the company
or its agent designated for that purpose for redemption, except--

(1) for any period (A) during which the New York Stock Exchange
is closed other than customary week-end and holiday closings or (B)
during which trading on the New York Stock Exchange is restricted;

(2) for any period during which an emergency exists as a
result of which (A) disposal by the company of securities owned by it
is not reasonably practicable or (B) it is not reasonably practicable
for such company fairly to determine the value of its net assets; or

(3) for such other periods as the Commission may by order permit
for the protection of security holders of the company.

The Commission shall by rules and regulations determine the
conditions under which (i) trading shall be deemed to be restricted and
(ii) an emergency shall be deemed to exist within the meaning of this
subsection.

(f) No registered open-end company shall restrict the
transferability or negotiability of any security of which it is the
issuer except in conformity with the statements with respect thereto
contained in its registration statement nor in contravention of such
rules and regulations as the Commission may prescribe in the interest
of the holders of all of the outstanding securities of such investment
company.

(g) No registered open-end company shall issue any of its
securities (1) for services; or (2) for property other than cash or
securities (including securities of which such registered company is
the issuer), except as a dividend or distribution to its security
holders or in connection with a reorganization.

[Codified to 15 U.S.C. 80a--22]

[Source: Section 22 of title I of the Act of August 22, 1940, (Pub.
L. No. 768; 54 Stat. 823), effective November 1, 1940, as amended by
section 12 of the Act of December 14, 1970 Pub. L. No. 91--547; 84
Stat. 1423), effective December 14, 1970; and section 616 of title VI
of the Act of December 4, 1987 (Pub. L. No. 100--181; 101 Stat. 1262),
effective December 4, 1987]

Distribution and Repurchase of Securities: Closed-end
Companies

Sec. 23. (a) No registered closed-end company shall issue any of
its securities (1) for services; or (2) for property other than cash or
securities (including securities of which such registered company is
the issuer), except as a dividend or distribution to its security
holders or in connection with a reorganization.

(b) No registered closed-end company shall sell any common stock of
which it is the issuer at a price below the current net asset value of
such stock, exclusive of any distributing commission or discount (which
net asset value shall be determined as of a time within forty-eight
hours, excluding Sundays and holidays, next preceding the time of such
determination), except (1) in connection with an offering to the
holders of one or more classes of its capital stock; (2) with the
consent of a majority of its common stockholders; (3) upon conversion
of a convertible security in accordance with its terms; (4) upon the
exercise of any warrant outstanding on the date of enactment of this
Act or issued in accordance with the provisions of section 18(d); or
(5) under such other circumstances as the Commission may permit by
rules and regulations or orders for the protection of
investors.

(c) No registered closed-end company shall purchase any securities
of any class of which it is the issuer except--

(1) on a securities exchange or such other open market as the
Commission may designate by rules and regulations or orders:
Provided, That if such securities are stock, such registered
company shall, within the preceding six months, have informed
stockholders of its intention to purchase stock of such class by letter
or report addressed to stockholders of such class; or

(2) pursuant to tenders, after reasonable opportunity to submit
tenders given to all holders of securities of the class to be
purchased; or

(3) under such other circumstances as the Commission may permit
by rules and regulations or orders for the protection of investors in
order to insure that such purchases are made in a manner or on a basis
which does not unfairly discriminate against any holders of the class
or classes of securities to be purchased.

[Codified to 15 U.S.C. 80a--23]

[Source: Section 23 of title I of the Act of August 22, 1940 (Pub.
L. No. 768; 54 Stat. 825), effective November 1, 1940]

Registration of Securities under Securities Act of
1933

Sec. 24. (a) In registering under the Securities Act of 1933 any
security of which it is the issuer, a registered investment company, in
lieu of furnishing a registration statement containing the information
and documents specified in schedule A of said Act, may file a
registration statement containing the following information and
documents:

(1) such copies of the registration statement filed by such
company under this title, and of such reports filed by such company
pursuant to section 30 or such
copies of portions of such registration statement and reports, as the
Commission shall designate by rules and regulations; and

(2) such additional information and documents (including a
prospectus) as the Commission shall prescribe by rules and regulations
as necessary or appropriate in the public interest or for the
protection of investors.

(b) It shall be unlawful for any of the following companies,
or for any underwriter for such a company, in connection with a public
offering of any security of which such company is the issuer, to make
use of the mails or any means or instrumentalities of
interstate

commerce, to transmit any advertisement, pamphlet, circular, form
letter, or other sales literature addressed to or intended for
distribution to prospective investors unless three copies of the full
text thereof have been filed with the Commission or are filed with the
Commission within ten days thereafter:

(1) any registered open-end company;

(2) any registered unit investment trust; or

(3) any registered face-amount certificate company.

(c) In addition to the powers relative to prospectuses granted the
Commission by section 10 of the
Securities Act of 1933, the Commission is authorized to require, by
rules and regulations or order, that the information contained in any
prospectus relating to any periodic payment plan certificate or
face-amount certificate registered under the Securities Act of 1933 on
or after the effective date of this title be presented in such form and
order of items, and such prospectus contain such summaries of any
portion of such information, as are necessary or appropriate in the
public interest or for the protection of investors.

(d) The exemption provided by paragraph (8) of
section 3(a) of the Securities
Act of 1933 shall not apply to any security of which an investment
company is the issuer. The exemption provided by paragraph (11) of said
section 3(a) shall not apply to any security of which a registered
investment company is the issuer. The exemption provided by
section 4(3) of the Securities
Act of 1933 shall not apply to any transaction in a security issued by
a face-amount certificate company or in a redeemable security issued by
an open-end management company or unit investment trust if any other
security of the same class is currently being offered or sold by the
issuer or by or through an underwriter in a distribution which is not
exempted from section 5 of said Act, except to such extent and subject
to such terms and conditions as the Commission, having due regard for
the public interest and the protection of investors, may prescribe by
rules or regulations with respect to any class of persons, securities,
or transactions.

(e) For the purpose of section 11 of the Securities Act of 1933, as
amended, the effective date of the latest amendment filed shall be
deemed the effective date of the registration statement with respect to
securities sold after such amendment shall have become effective. For
the purposes of section 13 of the Securities Act of 1933, as amended,
no such security shall be deemed to have been bona fide offered to the
public prior to the effective date of the latest amendment filed
pursuant to this subsection. Except to the extent the Commission
otherwise provides by rules or regulations as appropriate in the public
interest or for the protection of investors, no prospectus relating to
a security issued by a face-amount certificate company or a redeemable
security issued by an open-end management company or unit investment
trust which varies for the purposes of subsection (a)(3) of section 10
of the Securities Act of 1933 from the latest prospectus filed as a
part of the registration statement shall be deemed to meet the
requirements of said section 10 unless filed as part of an amendment to
the registration statement under said Act and such amendment has become
effective.

(f) REGISTRATION OF INDEFINITE AMOUNT OF SECURITIES.--

(1) REGISTRATION OF SECURITIES.--Upon the effective date
of its registration statement, as provided by
section 8 of the Securities Act
of 1933, a face-amount certificate company, open-end management
company, or unit investment trust, shall be deemed to have registered
an indefinite amount of securities.

(2) PAYMENT OF REGISTRATION FEES.--Not later than 90
days after the end of the fiscal year of a company or trust referred to
in paragraph (1), the company or trust, as applicable, shall pay a
registration fee to the Commission, calculated in the manner specified
in section 6(b) of the Securities Act of 1933, based on the aggregate
sales price for which its securities (including, for purposes of this
paragraph, all securities issued pursuant to a dividend reinvestment
plan) were sold pursuant to a registration of an indefinite amount of
securities under this subsection during the previous fiscal year of the
company or trust, reduced by--

(A) the aggregate redemption or repurchase price of the
securities of the company or trust during that year; and

(B) the aggregate redemption or repurchase price of the
securities of the company or trust during any prior fiscal year ending
not more than 1 year before the date of enactment of the Investment
Company Act Amendments of 1996, that were not used previously by the
company or trust to reduce fees payable under this section.

(3) INTEREST DUE ON LATE PAYMENT.--A company or trust
paying the fee required by this subsection or any portion thereof more
than 90 days after the end of the fiscal year of the company or trust
shall pay to the Commission interest on unpaid amounts, at the average
investment rate for Treasury tax and loan accounts published by the
Secretary of the Treasury pursuant to section 3717(a) of title 31,
United States Code. The payment of interest pursuant to this paragraph
shall not preclude the Commission from bringing an action to enforce
the requirements of paragraph (2).

(4) RULEMAKING AUTHORITY.--The Commission may adopt
rules and regulations to implement this subsection.

(g) ADDITIONAL PROSPECTUSES.--In addition to any
prospectus permitted or required by
section 10(a) of the Securities
Act of 1933, the Commission shall permit, by rules or regulations
deemed necessary or appropriate in the public interest or for the
protection of investors, the use of a prospectus for purposes of
section 5(b)(1) of that Act with respect to securities issued by a
registered investment company. Such a prospectus, which may include
information the substance of which is not included in the prospectus
specified in section 10(a) of the Securities Act of 1933, shall be
deemed to be permitted by section 10(b) of that Act.

[Codified to 15 U.S.C. 80a--24]

[Source: Section 24 of title I of the Act of August 22, 1940 (Pub.
L. No. 768; 54 Stat. 825), effective November 1, 1940, as amended by
sections 402 and 403 of title IV of the Act of August 10, 1954 (Pub. L.
No. 577; 68 Stat. 825), effective October 9, 1954; section 13 of the
Act of December 14, 1970 (Pub. L. No. 91--547; 84 Stat. 1423),
effective December 14, 1970; and section 617 of title VI of the Act of
December 4, 1987 (Pub. L. No. 100--181); 101 Stat. 1262), effective
December 4, 1987; sections 203(a)-(b), and 204 of title II of the Act
of October 11, 1996 (Pub. L. No. 104--290; 110 Stat. 3427, and 3428),
effective on the earlier of (1) October 10, 1997, or (2) the effective
date of final rules or regulations issued in accordance with section
24(f) of the Investment Company Act of 1940, as amended, except that
subsection (g) is effective October 11, 1996]

Plans of Reorganization

Sec. 25. (a) Any person who, by use of the mails or any means or
instrumentality of interstate commerce or otherwise, solicits or
permits the use of his name to solicit any proxy, consent,
authorization, power of attorney, ratification, deposit, or dissent in
respect of any plan of reorganization of any registered investment
company shall file with, or mail to, the Commission for its
information, within twenty-four hours after the commencement of any
such solicitation, a copy of such plan and any deposit agreement
relating thereto and of any proxy, consent, authorization, power of
attorney, ratification, instrument of deposit, or instrument of dissent
in respect thereto, if or to the extent that such documents shall not
already have been filed with the Commission.

(b) The Commission is authorized, if so requested, prior to any
solicitation of security holders with respect to any plan of
reorganization, by any registered investment company which is, or any
of the securities of which are, the subject of or is a participant in
any such plan, or if so requested by the holders of 25 per centum of
any class of its outstanding securities, to render an advisory report
in respect of the fairness of any such plan and its effect upon any
class or classes of security holders. In such event any registered
investment company, in respect of which the Commission shall have
rendered any such advisory report, shall mail promptly a copy of such
advisory report to all its security holders affected by any such plan:
Provided, That such advisory report shall have been received
by it at least forty-eight hours (not including Sundays and holidays)
before final action is taken in relation to such plan at any meeting of
security holders called to act in relation thereto, or
any adjournment
of any such meeting, or if no meeting be called, then prior to the
final date of acceptance of such plan by security holders. In respect
of securities not registered as to ownership, in lieu of mailing a copy
of such advisory report, such registered company shall publish promptly
a statement of the existence of such advisory report in a newspaper of
general circulation in its principal place of business and shall make
available copies of such advisory report upon request. Notwithstanding
the provision of this section the Commission shall not render such
advisory report although so requested by any such investment company or
such security holders if the fairness or feasibility of said plan is in
issue in any proceeding pending in any court of competent jurisdiction
unless such plan is submitted to the Commission for that purpose by
such court.

(c) Any district court of the United States in the State of
incorporation of a registered investment company, or any such court for
the district in which such company maintains its principal place of
business, is authorized to enjoin the consummation of any plan of
reorganization of such registered investment company upon proceedings
instituted by the Commission (which is authorized so to proceed upon
behalf of security holders of such registered company, or any class
thereof), if such court shall determine that any such plan is not fair
and equitable to all security holders.

(d) Nothing contained in this section shall in any way affect or
derogate from the powers of the courts of the United States and the
Commission with reference to reorganizations contained in title 11 of
the United States Code.

[Codified to 15 U.S.C. 80a--25]

[Source: Section 25 of title I of the Act of August 22, 1940 (Pub.
L. No. 768; 54 Stat. 826), effective November 1, 1940, as amended by
section 14 of the Act of December 14, 1970 (Pub. L. No. 91--547; 84
Stat. 1424), effective December 14, 1970; section 310(c) of title III
of the Act of November 6, 1978 (Pub. L. No. 95--598; 92 Stat. 2676),
effective October 1, 1979]

Unit Investment Trusts

Sec. 26. (a) No principal underwriter for or depositor of a
registered unit investment trust shall sell, except by surrender to the
trustee for redemption, any security of which such trust is the issuer
(other than short-term paper), unless the trust indenture, agreement of
custodianship, or other instrument pursuant to which such security is
issued--

(1) designates one or more trustees or custodians, each of
which is a bank, and provides that each such trustee or custodian shall
have at all times an aggregate capital, surplus, and undivided profits
of a specified minimum amount, which shall not be less than $500,000
(but may also provide, if such trustee or custodian publishes reports
of condition at least annually, pursuant to law or to the requirements
of its supervising or examining authority, that for the purposes of
this paragraph the aggregate capital, surplus, and undivided profits of
such trustee or custodian shall be deemed to be its aggregate capital,
surplus, and undivided profits as set forth in its most recent report
of condition so published);

(2) provides, in substance, (A) that during the life of the trust
the trustee or custodian, if not otherwise remunerated, may charge
against and collect from the income of the trust, and from the corpus
thereof if no income is available, such fees for its services and such
reimbursement for its expenses as are provided for in such instrument;
(B) that no such charge or collection shall be made except for services
theretofore performed or expenses theretofore incurred; (C) that no
payment to the depositor of or a principal underwriter for such trust,
or to any affiliated person or agent of such depositor or underwriter,
shall be allowed the trustee or custodian as an expense (except that
provision may be made for the payment to any such person of a fee, not
exceeding such reasonable amount as the Commission may prescribe as
compensation for performing bookkeeping and other administrative
services, of a character normally performed by the trustee or custodian
itself); and (D) that the trustee or custodian shall have possession of
all securities and other property in which the funds of the trust are
invested, all funds held for such investment, all equalization,
redemption, and other special funds of the trust, and all income upon,
accretions to, and proceeds of such property and funds, and shall
segregate and hold
the same in trust
(subject only to the charges and collections allowed under clauses (A),
(B), and (C)) until distribution thereof to the security holders of the
trust;

(3) provides, in substance, that the trustee or custodian shall
not resign until either (A) the trust has been completely liquidated
and the proceeds of the liquidation distributed to the security holders
of the trust, or (B) a successor trustee or custodian, having the
qualifications prescribed in paragraph (1), has been designated and has
accepted such trusteeship or custodianship; and

(4) provides, in substance, (A) that a record will be kept by the
depositor or an agent of the depositor of the name and address of, and
the shares issued by the trust and held by, every holder of any
security issued pursuant to such instrument, insofar as such
information is known to the depositor or agent; and (B) that whenever a
security is deposited with the trustee in substitution for any security
in which such security holder has an undivided interest, the depositor
or the agent of the depositor will, within five days after such
substitution, either deliver or mail to such security holder a notice
of substitution, including an identification of the securities
eliminated and the securities substituted, and a specification of the
shares of such security holder affected by the substitution.

(b) The Commission may, after consultation with and taking into
consideration the views of the Federal banking agencies (as defined in
section 3 of the Federal Deposit Insurance Act), adopt rules and
regulations, and issue orders, consistent with the protection of
investors, prescribing the conditions under which a bank, or an
affiliated person of a bank, either of which is an affiliated person of
a principal underwriter for, or depositor of, a registered unit
investment trust, may serve as trustee or custodian under subsection
(a)(1).

(c) It shall be unlawful for any depositor or trustee of a
registered unit investment trust holding the security of a single
issuer to substitute another security for such security unless the
Commission shall have approved such substitution. The Commission shall
issue an order approving such substitution if the evidence establishes
that it is consistent with the protection of investors and the purposes
fairly intended by the policy and provisions of this title.

(d) In the event that a trust indenture, agreement of
custodianship, or other instrument pursuant to which securities of a
registered unit investment trust are issued does not comply with the
requirements of subsection (a) of this section, such instrument will be
deemed to meet such requirements if a written contract or agreement
binding on the parties and embodying such requirements has been
executed by the depositor on the one part and the trustee or custodian
on the other part, and three copies of such contract or agreement have
been filed with the Commission.

(e) Whenever the Commission has reason to believe that a unit
investment trust is inactive and that its liquidation is in the
interest of the security holders of such trust, the Commission may file
a complaint seeking the liquidation of such trust in the district court
of the United States in any district wherein any trustee of such trust
resides or has its principal place of business. A copy of such
complaint shall be served on every trustee of such trust, and notice of
the proceeding shall be given such other interested persons in such
manner and at such times as the court may direct. If the court
determines that such liquidation is in the interest of the security
holders of such trust, the court shall order such liquidation and,
after payment of necessary expenses, the distribution of the proceeds
to the security holders of the trust in such manner and on such terms
as may to the court appear equitable.

(f) EXEMPTION.--

(1) IN GENERAL.--Subsection (a) does not apply to any
registered separate account funding variable insurance contracts, or to
the sponsoring insurance company and principal underwriter of such
account.

(2) LIMITATION ON SALES.--It shall be unlawful for any
registered separate account funding variable insurance contracts, or
for the sponsoring insurance company of such account, to sell any such
contract--

(A) unless the fees and charges deducted under the contract, in
the aggregate, are reasonable in relation to the services rendered, the
expenses expected to be incurred, and the risks assumed by the
insurance company, and, beginning on the earlier of August 1, 1997, or
the earliest effective date of any registration statement or amendment
thereto for
such contract
following the date of enactment of this subsection, the insurance
company so represents in the registration statement for the contract;
and

(B) unless the insurance company--

(i) complies with all other applicable provisions of this
section, as if it were a trustee or custodian of the registered
separate account;

(ii) files with the insurance regulatory authority of the State
which is the domiciliary State of the insurance company, an annual
statement of its financial condition, which most recent statement
indicates that the insurance company has a combined capital and
surplus, if a stock company, or an unassigned surplus, if a mutual
company, of not less than $1,000,000, or such other amount as the
Commission may from time to time prescribe by rule, as necessary or
appropriate in the public interest or for the protection of investors;
and

(iii) together with its registered separate accounts, is
supervised and examined periodically by the insurance authority of such
State.

(3) FEES AND CHARGES.--For purposes of paragraph (2),
the fees and charges deducted under the contract shall include all fees
and charges imposed for any purpose and in any manner.

(4) REGULATORY AUTHORITY.--The Commission may issue such
rules and regulations to carry out paragraph (2)(A) as it determines
are necessary or appropriate in the public interest or for the
protection of investors.

[Codified to 15 U.S.C. 80a--26]

[Source: Section 26 of title I of the Act of August 22,
1940 (Pub. L. No. 768; 54 Stat. 827), effective November 1, 1940, as
amended by section 15 of the Act of December 14, 1970 (Pub. L. No.
91--547; 84 Stat. 1424), effective December 14, 1970; and sections 618
and 619 of title VI of the Act of December 4, 1987 (Pub. L. No.
100--181; 101 Stat. 1262), effective December 4, 1987; section 205(a)
of title II of the Act of October 11, 1996 (Pub. L. No. 104--290; 110
Stat. 3429), effective October 11, 1996; section 211(a) of title II of
the Act of November 12, 1999 (Pub. L. No. 106--102; 113 Stat. 1396),
effective May 12, 2001]

Periodic Payment Plans

Sec. 27. (a) It shall be unlawful for any registered investment
company issuing periodic payment plan certificates, or for any
depositor of or underwriter for such company, to sell any such
certificate, if--

(1) the sales load on such certificate exceeds 9 per centum of
the total payments to be made thereon;

(2) more than one-half of any of the first twelve monthly
payments thereon, or their equivalent, is deducted for sales load;

(3) the amount of sales load deducted from any one of such first
payments exceeds proportionately the amount deducted from any other
such payment, or the amount deducted from any subsequent payment
exceeds proportionately the amount deducted from any other subsequent
payment;

(4) the first payment on such certificate is less than $20, or
any subsequent payment is less than $10;

(5) if such registered company is a management company, the
proceeds of such certificate or the securities in which such proceeds
are invested are subject to management fees (other than fees for
administrative services of the character described in clause (C),
paragraph (2), of section 26(a) of this title) exceeding such
reasonable amount as the Commission may prescribe, whether such fees
are payable to such company or to investment advisers thereof; or

(6) if such registered company is a unit investment trust the
assets of which are securities issued by a management company, the
depositor of or a principal underwriter for such trust, or any
affiliated person of such depositor or underwriter, is to receive from
such management company or any affiliated person thereof any fee or
payment on account of payments on such certificate exceeding such
reasonable amount as the Commission may prescribe.

(b) If it appears to the Commission, upon application or otherwise,
that smaller companies are subjected to relatively higher operating
costs and that in order to make due
allowance
therefor it is necessary or appropriate in the public interest and
consistent with the protection of investors that a provision or
provisions of paragraph (1), (2), or (3) of subsection (a) relative to
sales load be relaxed in the case of certain registered investment
companies issuing periodic payment plan certificates, or certain
specified classes of such companies, the Commission is authorized by
rules and regulations or order to grant any such company or class of
companies appropriate qualified exemptions from the provisions of said
paragraphs.

(c) It shall be unlawful for any registered investment company
issuing periodic payment plan certificates, or for any depositor of or
underwriter for such company, to sell any such certificate, unless--

(1) such certificate is a redeemable security; and

(2) the proceeds of all payments on such certificate (except such
amounts as are deducted for sales load) are deposited with a trustee or
custodian having the qualifications prescribed in paragraph (1) of
section 26(a) for the trustees
of unit investment trusts, and are held by such trustee or custodian
under an indenture or agreement containing, in substance, the
provisions required by paragraphs (2) and (3) of section 26(a) for the
trust indentures of unit investment trusts.

(d) Notwithstanding subsection (a) of this section, it shall be
unlawful for any registered investment company issuing periodic payment
plan certificates, or for any depositor of or underwriter for such
company, to sell any such certificate unless the certificate provides
that the holder thereof may surrender the certificate at any time
within the first eighteen months after the issuance of the certificate
and receive in payment thereof, in cash, the sum of (1) the value of
his account, and (2) an amount, from such underwriter or depositor,
equal to that part of the excess paid for sales loading which is over
15 per centum of the gross payments made by the certificate holder. The
Commission may make rules and regulations applicable to such
underwriters and depositors specifying such reserve requirements as it
deems necessary or appropriate in order for such underwriters and
depositors to carry out the obligations to refund sales charges
required by this subsection.

(e) With respect to any periodic payment plan certificate sold
subject to the provisions of subsection (d) of this section, the
registered investment company issuing such periodic payment plan
certificate, or any depositor of or underwriter for such company, shall
in writing (1) inform each certificate holder who has missed three
payments or more, within thirty days following the expiration of
fifteen months after the issuance of the certificate, or, if any such
holder has missed one payment or more after such period of fifteen
months but prior to the expiration of eighteen months after the
issuance of the certificate, at any time prior to the expiration of
such eighteen-month period, of his right to surrender his certificate
as specified in subsection (d) of this section, and (2) inform the
certificate holder of (A) the value of the holder's account as of the
time the written notice was given to such holder, and (B) the amount to
which he is entitled as specified in subsection (d) of this section.
The Commission may make rules specifying the method, form, and contents
of the notice required by this subsection.

(f) With respect to any periodic payment plan (other than a plan
under which the amount of sales load deducted from any payment thereon
does not exceed 9 per centum of such payment), the custodian bank for
such plan shall mail to each certificate holder, within sixty days
after the issuance of the certificate, a statement of charges to be
deducted from the projected payments on the certificate and a notice of
his right of withdrawal as specified in this section. The Commission
may make rules specifying the method, form, and contents of the notice
required by this subsection. The certificate holder may within
forty-five days of the mailing of the notice specified in this
subsection surrender his certificate and receive in payment thereof, in
cash, the sum of (1) the value of his account, and (2) an amount, from
the underwriter or depositor, equal to the difference between the gross
payments made and the net amount invested. The Commission may make
rules and regulations applicable to underwriters and depositors of
companies issuing any such certificates specifying such reserve
requirements as it deems necessary or appropriate in order for such
underwriters and depositors to carry out the obligations to refund
sales charges required by this subsection.

(g) Notwithstanding the provisions of subsections (a) and (d), a
registered investment company issuing periodic payment plan
certificates may elect, by written notice to the Commission, to be
governed by the provisions of subsection (h) rather than the provisions
of subsections (a) and (d) of this section.

(h) Upon making the election specified in subsection (g), it shall
be unlawful for any such electing registered investment company issuing
periodic payment plan certificates, or for any depositor of or
underwriter for such company, to sell any such certificate, if--

(1) the sales load on such certificate exceeds 9 per centum of
the total payments to be made thereon;

(2) more than 20 per centum of any payment thereon is deducted
for sales load, or any average of more than 16 per centum is deducted
for sales load from the first forty-eight monthly payments thereon, or
their equivalent;

(3) the amount of sales load deducted from any one of the first
twelve monthly payments, the thirteenth through twenty-fourth monthly
payments, the twenty-fifth through thirty-sixth monthly payments, or
the thirty-seventh through forth-eighth monthly payments, or their
equivalents, respectively, exceeds proportionately the amount deducted
from any other such payment, or the amount deducted from any subsequent
payment exceeds proportionately the amount deducted from any other
subsequent payment;

(4) the deduction for sales load on the excess of the payment or
payments in any month over the minimum monthly payment, or its
equivalent, to be made on the certificate exceeds the sales load
applicable to payments subsequent to the first forty-eight monthly
payments or their equivalent;

(5) the first payment on such certificate is less than $20, or
any subsequent payment is less than $10;

(6) if such registered company is a management company, the
proceeds of such certificate or the securities in which such proceeds
are invested are subject to management fees (other than fees for
administrative services of the character described in clause (C) of
paragraph (2) of section 26(a)) exceeding such reasonable amount as the
Commission may prescribe, whether such fees are payable to such company
or to investment advisers thereof; or

(7) if such registered company is a unit investment trust the
assets of which are securities issued by a management company, the
depositor of or principal underwriter for such trust, or any affiliated
person of such depositor or underwriter, is to receive from such
management company or any affiliated person thereof any fee or payment
on account of payments on such certificate exceeding such reasonable
amount as the Commission may prescribe.

(i)(1) This section does not apply to any registered separate
account funding variable insurance contracts, or to the sponsoring
insurance company and principal underwriter of such account, except as
provided in paragraph (2).

(2) It shall be unlawful for any registered separate account
funding variable insurance contracts, or for the sponsoring insurance
company of such account, to sell any such contract unless--

(A) such contract is a redeemable security; and

(B) the insurance company complies with section 26(f) and any
rules or regulations issued by the Commission under section 26(f).

(j) TERMINATION OF SALES.--

(1) TERMINATION.--Effective 30 days after the date of
enactment of the Military Personnel Financial Services Protection Act,
it shall be unlawful, subject to subsection (i)--

(A) for any registered investment company to issue any periodic
payment plan certificate; or

(B) for such company, or any depositor of or underwriter for any
such company, or any other person, to sell such a
certificate.

(2) NO INVALIDATION OF EXISTING CERTIFICATES.--Paragraph
(1) shall not be construed to alter, invalidate, or otherwise affect
any rights or obligations, including rights of redemption, under any
periodic payment plan certificate issued and sold before 30 days after
such date of enactment.

Sec. 28. (a) It shall be unlawful for any registered face-amount
certificate company to issue or sell any face-amount certificate, or to
collect or accept any payment on any such certificate issued by such
company on or after the effective date of this title,
unless--

(1) such company, if organized before March 15, 1940, was
actively and continuously engaged in selling face-amount certificates
on and before that date, and has outstanding capital stock worth upon a
fair valuation of assets not less than $50,000; or if organized on or
after March 15, 1940, has capital stock in an amount not less than
$250,000 which has been bona fide subscribed and paid for in cash; and

(2) such company maintains at all times minimum certificate
reserves on all its outstanding face-amount certificates in an
aggregate amount calculated and adjusted as follows:

(A) the reserves for each certificate of the installment type
shall be based on assumed annual, semi-annual, quarterly, or monthly
reserve payments according to the manner in which gross payments for
any certificate year are made by the holder, which reserve payments
shall be sufficient in amount, as and when accumulated at a rate not to
exceed 31/2 per centum per annum compounded annually, to provide
the minimum maturity or face amount of the certificate when due. Such
reserve payments may be graduated according to certificate years so
that the reserve payment or payments for the first certificate year
shall amount to at least 50 per centum of the required gross annual
payment for such year and the reserve payment or payments for each of
the second to fifth certificate years inclusive shall amount to at
least 93 per centum of each such year's required gross annual payment
and for the sixth and each subsequent certificate year the reserve
payment or payments shall amount to at least 96 per centum of each such
year's required gross annual payment: Provided, That such
aggregate reserve payments shall amount to at least 93 per centum of
the aggregate gross annual payments required to be made by the holder
to obtain the maturity of the certificate. The company may at its
option take as loading from the gross payment or payments for a
certificate year, as and when made by the certificate holder, an amount
or amounts equal in the aggregate for such year to not more than the
excess, if any, of the gross payment or payments required to be made by
the holder for such year, over and above the percentage of the gross
annual payment required herein for such year for reserve purposes. Such
loading may be taken by the company prior to or after the setting up of
the reserve payment or payments for such year and the reserve payment
or payments for such year may be graduated and adjusted to correspond
with the amount of the gross payment or payments made by the
certificate holder for such year less the loading so taken;

(B) if the foregoing minimum percentages of the gross annual
payments required under the provisions of such certificate should
produce reserve payments larger than are necessary at 31/2 per
centum per annum compounded annually to provide the minimum maturity or
face amount of the certificate when due, the reserve shall be based
upon reserve payments accumulated as provided under preceding
subparagraph (A) of this paragraph except that in lieu of the
31/2 per centum rate specified therein, such rate shall be
lowered to the minimum rate, expressed in multiples of one-eighth of 1
per centum, which will accumulate such reserve payments to the maturity
value when due;

(C) if the actual annual gross payment to be made by the
certificate holder on any certificate issued prior to or after the
effective date of this Act is less than the amount of any assumed
reserve payment or payments for a certificate year, such company shall
maintain as a part of such minimum certificate reserves a deficiency
reserve equal to the total present value of future deficiencies in the
gross payments, calculated at a rate not to exceed 31/2 per
centum per annum compounded annually;

(D) for each certificate of the installment type the amount of
the reserve shall at any time be at least equal to (1) the then amount
of the reserve payments set up under section 28(a)(2)(A) or (B); (2)
the accumulations on such reserve payments as computed under
subparagraphs (A) or (B) of this paragraph (2); (3) the amount of any
deficiency reserve required under subparagraph (C) hereof; and (4) such
amount as shall have been credited to the account of each certificate
holder in the form of any credit, or any dividend, or any interest in
addition to the minimum maturity amount specified in such certificate,
plus any accumulations on any amount or amounts so credited, at a rate
not exceeding 31/2 per centum per annum compounded
annually;

(E) for each certificate which is fully paid, including any fully
paid obligations resulting from or effected upon the maturity of the
previously issued certificate, and for each paid-up certificate issued
as provided in subsection (f) of this section prior to maturity, the
amount of the reserve shall at any time be at least equal to (1) such
amount as and when accumulated at a rate not to exceed 31/2 per
centum per annum compounded annually, will provide the amount or
amounts payable when due and (2) such amount as shall have been
credited to the account of each such certificate holder in the form of
any credit, or any dividend, or any interest in addition to the minimum
maturity amount specified in the certificate, plus any accumulations on
any amount or amounts so credited, at a rate not exceeding 31/2
per centum per annum compounded annually;

(F) for each certificate of the installment type under which
gross payments have been made by or credited to the holder thereof
covering a payment period or periods or any part thereof beyond the
then current payment period as defined by the terms of such
certificate, and for which period or periods no reserve has been set up
under subparagraph (A) or (B) hereof, an advance payment reserve shall
be set up and maintained in the amount of the present value of any such
unapplied advance gross payments, computed at a rate not to exceed
31/2 per centum per annum compounded annually;

(G) such appropriate contingency reserves for death and
disability benefits and for reinstatement rights on any such
certificate providing for such benefits or rights as the Commission
shall prescribe by rule, regulation, or order based upon the experience
of face-amount companies in relation to such contingencies.

At no time shall the aggregate certificate reserves herein required
by subparagraphs (A) to (F), inclusive, be less than the aggregate
surrender values and other amounts to which all certificate holders may
be then entitled.

For the purpose of this subsection (a), no certificate of the
installment type shall be deemed to be outstanding if before a
surrender value has been attained the holder thereof has been in
continuous default in making his payments thereon for a period of one
year.

(b) It shall be unlawful for any registered face-amount certificate
company to issue or sell any face-amount certificate, or to collect or
accept any payment on any such certificate issued by such company on or
after the effective date of this title unless such company has, in cash
or qualified investments, assets having a value not less than the
aggregate amount of the capital stock requirement and certificate
reserves as computed under the provisions of subsection (a) hereof. As
used in this subsection, "qualified investments" means
investments of a kind which life-insurance companies are permitted to
invest in or hold under the provisions of the Code of the District of
Columbia as heretofore or hereafter amended, and such other investments
as the Commission shall by rule, regulation, or order authorize as
qualified investments. Such investments shall be valued in accordance
with the provisions of said Code where such provisions are applicable.
Investments to which such provisions do not apply shall be valued in
accordance with such rules, regulations, or orders as the Commission
shall prescribe for the protection of investors.

(c) The Commission shall by rule, regulation, or order, in the
public interest or for the protection of investors, require a
registered face-amount certificate company to deposit and maintain,
upon such terms and conditions as the Commission shall prescribe and as
are appropriate for the protection of investors, with one or more
institutions having the qualifications required by paragraph (1) of
section 26(a) for a trustee of
a unit investment trust, all or any part of the investments maintained
by such company as certificate reserve requirements under the
provisions of subsection (b) hereof: Provided, however, That
where qualified investments are maintained on deposit by such company
in respect of its liabilities under certificates issued to or held by
residents of any State as required by the statute of such State or by
any order, regulation, or requirement of such State or any official or
agency thereof, the amount so on deposit, but not to exceed the amount
of reserves required by subsection (a) hereof for the certificates so
issued or held, shall be deducted from the amount of qualified
investments that may be required to be deposited hereunder.

Assets which are qualified investments under subsection (b) and
which are deposited under or as permitted by this subsection (c), may
be used and shall be considered as a part of the assets required to be
maintained under the provisions of said subsection (b).

(d) It shall be unlawful for any registered face-amount certificate
company to issue or sell any face-amount certificate, or to collect or
accept any payment on any such certificate issued by such company on or
after the effective date of this title, unless such certificate
contains a provision or provisions to the effect--

(1) that, in respect of any certificate of the installment type,
during the first certificate year the holder of the certificate, upon
surrender thereof, shall be entitled to a value payable in cash not
less than the reserve payments as specified in subparagraph (A) or (B)
of paragraph (2) of subsection (a) and at the end of such certificate
year, a value payable in cash at least equal to 50 per centum of the
amount of the gross annual payment required thereby for such year;

(2) that, in respect of any certificate of the installment type,
at any time after the expiration of the first certificate year and
prior to maturity, the holder of the certificate, upon surrender
thereof, shall be entitled to a value payable in cash not less than the
then amount of the reserve for such certificate required by numbered
items (1) and (2) of subparagraph (D) of paragraph (2) of subsection
(a) hereof, less a surrender charge that shall not exceed 2 per centum
of the face or maturity amount of the certificate, or 15 per centum of
the amount of such reserve, whichever is the lesser, but in no event
shall such value be less than 50 per centum of the amount of such
reserve. The amount of the surrender value for the end of each
certificate year shall be set out in the certificate;

(3) that, in respect of any certificate of the installment type,
the holder of the certificate, upon surrender thereof for cash or upon
receipt of a paid-up certificate as provided in subsection (f) hereof
shall be entitled to a value payable in cash equal to the then amount
of any advance payment reserve under such certificate required by
subparagraph (F) of paragraph (2) of subsection (a) hereof in addition
to any other amounts due the holder hereunder;

(4) that at any time prior to maturity, in respect of any
certificate which is fully paid, the holder of the certificate, upon
surrender thereof, shall be entitled to a value payable in cash not
less than the then amount of the reserve for such certificate required
by item (1) of subparagraph (E) of paragraph (2) of subsection (a)
hereof, less a surrender charge that shall not exceed 2 per centum of
the face or maturity amount of the certificate, or 15 per centum of the
amount of such reserve, whichever is the lesser: Provided,
however, That such surrender charge shall not apply as to any
obligations of a fully paid type resulting from the maturity of a
previously issued certificate. The amount of the surrender value for
the end of each certificate year shall be set out in the certificate;

(5) that in respect of any certificate, the holder of the
certificate, upon maturity, upon surrender thereof for cash or upon
receipt of a paid-up certificate as provided in subsection (f) hereof,
shall be entitled to a value payable in cash equal to the then amount
of the reserve, if any, for such certificate required by item (4) of
subparagraph (D) of paragraph (2) of subsection (a) hereof or item (2)
of subparagraph (E) of paragraph (2) of subsection (a) hereof in
addition to any other amounts due the holder hereunder.

The term "certificate year" as used in this section in respect
of any certificate of the installment type means a period or periods
for which one year's payment or payments as provided by the certificate
have been made thereon by the holder and the certificate maintained in
force by such payments for the time for which the same have been made,
and in respect of any certificate which is fully paid or paid-up means
any year ending on the anniversary of the date of issuance of the
certificate.

Any certificate may provide for loans or advances by the company to
the certificate holder on the security of such certificate upon terms
prescribed therein but at an interest rate not exceeding 6 per centum
per annum. The amount of the required reserves, deposits, and the
surrender values thereof available to the holder may be adjusted to
take into account any unpaid balance on such loans or advances and
interest thereon, for the purposes of this subsection and subsections
(b) and (c) hereof.

Any certificate may provide that the company at its option may,
prior to the maturity thereof, defer any payment or payments to the
certificate holder to which he may be entitled under this subsection
(d), for a period of not more than thirty days: Provided,
That in the event such option is exercised by the company,
interest shall accrue on any payment or payments due to the holder, for
the period of such deferment at a rate equal to that used in
accumulating the reserves for such certificate: And provided
further, That the Commission may, by rules and regulations or
orders in the public interest or for the protection of investors, make
provision for any other deferment upon such terms and conditions as it
shall prescribe.

(e) It shall be unlawful for any registered face-amount certificate
company to issue or sell any face-amount certificate, or to collect or
accept any payment on any such certificate issued by such company on or
after the effective date of this title, which certificate makes the
holder liable to any legal action or proceeding for any unpaid amount
on such certificate.

(f) It shall be unlawful for any registered face-amount certificate
company to issue or sell any face-amount certificate, or to collect or
accept any payment on any such certificate issued by such company on or
after the effective date of this title, (1) unless such face-amount
certificate contains a provision or provisions to the effect that the
holder shall have an optional right to receive a paid-up certificate in
lieu of the then attained cash surrender value provided therein and in
the amount of such value plus accumulations thereon at a rate to be
specified in the paid-up certificate equal to that used in computing
the reserve on the original certificate under subparagraph (A) or (B)
of paragraph (2) of subsection (a) of this section, such paid-up
certificate to become due and payable at the end of a period equal to
the balance of the term of such original certificate before maturity;
and during the period prior to maturity such paid-up certificate shall
have a cash value upon surrender thereof equal to the then amount of
the reserve therefor; and (2) unless such face-amount certificate
contains a further provision or provisions to the effect that if the
holder be in continuous default in his payments on such certificate for
a period of six months without having exercised his option to receive a
paid-up certificate, as herein provided, the company at the expiration
of such six months shall pay the surrender value in cash if such value
is less than $100 or if such value is $100 or more shall issue such
paid-up certificate to such holder and such payment or issuance, plus
the payment of all other amounts to which he may be then entitled under
the original certificate, shall operate to cancel his original
certificate: Provided, That in lieu of the issuance of a new
paid-up certificate the original certificate may be converted into a
paid-up certificate with the same effect; and (3) unless, where such
certificate provides, in the event of default, for the deferment of
payments thereon by the holder or of the due dates of such payments or
of the maturity date of the certificate, it shall also provide in
effect for the right of reinstatement by the holder of the certificate
after default and for an option in the holder, at the time of
reinstatement, to make up the payment or payments for the default
period next preceding such reinstatement with interest thereon not
exceeding 6 per centum per annum, with the same effect as if no such
default in making such payments had occurred.

The term "default" as used in this subsection (f) shall,
without restricting its usual meaning, include a failure to make a
payment or payments as and when provided by the certificate.

(g) The foregoing provisions of this section shall not apply to a
face-amount certificate company which on or before the effective date
of this Act has discontinued the offering of face-amount certificates
to the public and issues face-amount certificates only to the holders
of certificates previously issued pursuant to an obligation expressed
or implied in such certificates.

(h) It shall be unlawful for any registered face-amount
certificate company which does not maintain the minimum certificate
reserve on all its outstanding face-amount certificates issued prior to
the effective date of this Act, in an aggregate amount calculated and
adjusted as provided in section 28, to declare or pay any dividends on
the shares of such company for or during any calendar year which shall
exceed one-third of the net earnings for the next preceding calendar
year or which shall exceed 10 per centum of the aggregate net
earnings
for the next
preceding five calendar years, whichever is the lesser amount, or any
dividend which shall have been forbidden by the Commission pursuant to
the provision of the next sentence of this paragraph. At least thirty
days before such company shall declare, pay, or distribute any
dividend, it shall give the Commission written notice of its intention
to declare, pay, or distribute the same; and if at any time it shall
appear to the Commission that the declaration, payment or distribution
of any dividend for or during any calendar year might impair the
financial integrity of such company or its ability to meet its
liabilities under its outstanding face-amount certificates, it may by
order forbid the declaration, distribution, or payment of any such
dividend.

(i) The foregoing provisions of this section shall apply to all
face-amount certificates issued prior to the effective date of this
subsection; to the collection or acceptance of any payment of such
certificates, to the issuance of face-amount certificates to the
holders of such certificates pursuant to an obligation expressed or
implied in such certificates; to the provisions of such certificates;
to the minimum certificate reserves and deposits maintained with
respect thereto; and to the assets that the issuer of such certificate
was and is required to have with respect to such certificates. With
respect to all face-amount certificates issued after the effective date
of this subsection, the provisions of this section shall apply except
as hereinafter provided.

(1) Notwithstanding subparagraph (A) of paragraph (2) of
subsection (a), the reserves for each certificate of the installment
type shall be based on assumed annual, semi-annual, quarterly, or
monthly reserve payments according to the manner in which gross
payments for any certificate year are made by the holder, which reserve
payments shall be sufficient in amount, as and when accumulated at a
rate not to exceed 31/2 per centum per annum compounded
annually, to provide the minimum maturity or face amount of the
certificate when due. Such reserve payments may be graduated according
to certificate years so that the reserve payment or payments for the
first three certificate years shall amount to at least 80 per centum of
the required gross annual payment for such years; the reserve payment
or payments for the fourth certificate year shall amount to at least 90
per centum of such year's required gross annual payment; the reserve
payment or payments for the fifth certificate year shall amount to at
least 93 per centum of such year's gross annual payment; and for the
sixth and each subsequent certificate year the reserve payment or
payments shall amount to at least 96 per centum of each such year's
required gross annual payment: Provided, That such aggregate
reserve payments shall amount to at least 93 per centum of the
aggregate gross annual payments required to be made by the holder to
obtain the maturity of the certificate. The company may at its option
take as loading from the gross payment or payments for a certificate
year, as and when made by the certificate holder, an amount or amounts
equal in the aggregate for such year to not more than the excess, if
any, of the gross payment or payments required to be made by the holder
for such year, over and above the percentage of the gross annual
payment required herein for such year for reserve purposes. Such
loading may be taken by the company prior to or after the setting up of
the reserve payment or payments for such year and the reserve payment
or payments for such year may be graduated and adjusted to correspond
with the amount of the gross payment or payments made by the
certificate holder for such year less the loading so taken.

(2) Notwithstanding paragraphs (1) and (2) of subsection (d), (A)
in respect of any certificate of the installment type, during the first
certificate year, the holder of the certificate, upon surrender
thereof, shall be entitled to a value payable in cash not less than 80
per centum of the amount of the gross payments made on the certificate;
and (B) in respect of any certificate of the installment type, at any
time after the expiration of the first certificate year and prior to
maturity, the holder of the certificate, upon surrender thereof, shall
be entitled to a value payable in cash not less than the then amount of
the reserve for such certificate required by clauses (1) and (2) of
subparagraph (D) of paragraph (2) of subsection (s), less a surrender
charge that shall not exceed 2 per centum of the face or maturity
amount of the certificate, or 15 per centum of the amount of such
reserve, whichever is the lesser, but in no event shall such value be
less than 80 per centum of the
gross payments
made on the certificate. The amount of the surrender value for the end
of each certificate year shall be set out in the certificate.

[Codified to 15 U.S.C. 80a--28]

[Source: Section 28 of title I of the Act of August 22, 1940 (Pub.
L. No. 768; 54 Stat. 829), effective November 1, 1940, as amended by
section 17 of the Act of December 14, 1970 (Pub. L. No. 91--547; 84
Stat. 1426), effective June 13, 1970; and sections 620 and 621 of title
VI of the Act of December 4, 1987 (Pub. L. No. 100--181; 101 Stat.
1262), effective December 4, 1987]